Marketing%20of%20services

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Marketing of services
Customer Decision Process

• Zita Kelemen

3. seminar
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Knowledge is power, so

• What is the servuction model?
• What are the 4 characteristics of services?
• How can we manage the problems caused by
  perishability?
• How can we classify services?

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Customer Decision MakingThree-Stage Model of
Service Consumption
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How would you choose a WM?
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The Purchase Process for Services
Prepurchase Stage
Consumption stage
Post-Encounter Stage
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Customer Decision Process
1. Prepurchase Stage
Stimulus
Problem awareness
Information search
Evaluation of alternatives

• Internal
• External

• Commercial cue
• Physical cue
• Social cue

• Multiattribute models
• Linear compensatory
• approach
• Lexicographic approach

• Shortage
• Unfulfilled
• desire

3.Post-Encounter Stage
2.Consumption stage
Post-Purchase Evaluation
Choice

• Evaluation of
• satisfaction

• Buying
• Using
• Disposing

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Prepurchase Stage Overview

• Customers seek solutions to aroused needs
• Evaluating a service may be difficult
• Uncertainty about outcomes increases perceived
  risk
• What risk reduction strategies can service
  suppliers develop?
• Understanding customers service expectations

Prepurchase Stage
Service Encounter Stage
Post-Encounter Stage
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Customers Seek Solutions to Aroused Needs

• People buy goods and services to meet specific
  needs/wants
• External sources may stimulate the awareness of a
  need
• Companies may seek opportunities by monitoring
  consumer attitudes and behavior

Prudential Financials advertising stimulates
thinking about retirement needs By. C. Lovelock
Courtesy of Masterfile Corporation
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Evaluating a Service May Be Difficult

• Search attributes help customers evaluate a
  product before purchase
• Style, color, texture, taste, sound
• Experience attributes cannot be evaluated before
  purchasemust experience product to know it
• Vacations, sporting events, medical procedures
• Credence attributes are product characteristics
  that customers find impossible to evaluate
  confidently even after purchase and consumption
• Quality of repair and maintenance work

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How Product Attributes Affect Ease of Evaluation
Most Goods
Most Services
Difficult
Easy
to evaluate
to evaluate
Restaurant meals Lawn fertilizer Haircut Enter
tainment
Computer repair Education Legal
services Complex surgery
Clothing Chair Motor vehicle Foods
High in search
High in experience
High in credence
attributes
attributes
attributes
NOTE Difficulty of evaluation tends to decrease
with broad exposure to a service category
and frequency of use of a specific supplier
Source
Adapted from Zeithaml
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Perceived Risks in Purchasing and Using Services

• Performanceunsatisfactory performance outcomes
• Financialmonetary loss, unexpected extra costs
• Temporalwasted time, delays leading to problems
• Physicalpersonal injury, damage to possessions
• Psychologicalfears and negative emotions
• Socialhow others may think and react

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How Might Consumers Handle Perceived Risk?

• Seeking information from respected personal
  sources
• Being loyal to a brand (high switching costs)
• Relying on a firm that has a good reputation
• Looking for guarantees and warranties
• Visiting service facilities or trying aspects of
  service before purchasing
• Asking knowledgeable employees about competing
  services
• Examining tangible cues or other physical
  evidence
• Using the Internet to compare service offerings
  and search for independent reviews and ratings

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Strategic Responses to Managing Customer
Perceptions of Risk

• Offer performance warranties, guarantees to
  protect against fears of monetary loss
• For products where customers worry about
  performance, sensory risks
• Offer previews, free trials (provides experience)
• Advertising (helps to visualize)
• For products where customers perceive physical or
  psychological risks
• Institute visible safety procedures
• Deliver automated messages about anticipated
  problems
• Websites offering FAQs and more detailed
  background
• Train staff members to be respectful and
  empathetic

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AOL Offers Free Trial Software to Attract
Prospective Customers
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Understanding Customers Service Expectations

• Customers evaluate service quality by comparing
  what they expect against what they perceive
• Situational and personal factors also considered
• Expectations of good service vary from one
  business to another, and among differently
  positioned service providers in the same industry
• Expectations change over time
• Example Service Perspectives
• Parents wish to participate in decisions relating
  to their childrens medical treatment for heart
  problems
• Media coverage, education, the Internet has made
  this possible

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Consumption Stage
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Service Encounter Stage

• Service encounters range from high- to
  low-contact
• Understanding the servuction system
• Service marketing systems high-contact and
  low-contact
• Implications for customer participation in
  service creation and delivery

Prepurchase Stage
Service Encounter Stage
Post-Encounter Stage
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Service Encounters Range from High-Contact to
Low-Contact
C. Lovelock Levels of Customer Contact with
Service Organizations
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Distinctions between High-Contact and Low-Contact
Services

• High-Contact Services
• Customers visit service facility and remain
  throughout service delivery
• Active contact between customers and service
  personnel
• Includes most people-processing services
• Low-Contact Services
• Little or no physical contact with service
  personnel
• Contact usually at arms length through
  electronic or physical distribution channels
• New technologies (e.g. the Web) help reduce
  contact levels
• Medium-Contact Services Lie in between These Two

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The Servuction SystemService Production and
Delivery

• Service Operations (front stage and backstage)
• Where inputs are processed and service elements
  created
• Includes facilities, equipment, and personnel
• Service Delivery (front stage)
• Where final assembly of service elements takes
  place and service is delivered to customers
• Includes customer interactions with operations
  and other customers
• Service Marketing (front stage)
• Includes service delivery (as above) and all
  other contacts between service firm and customers

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Service Marketing System for aHigh-Contact
Service
SERVICE MARKETING SYSTEM
Other Contact Points
Service Delivery System
Advertising Sales Calls Market Research
Surveys Billing/Statements Misc. Mail, Phone
Calls, E-mails, Faxes, etc. Website Random
Exposure to Facilities/Vehicles Chance
Encounters with Service Personnel Word of Mouth
Service Operations System
Other Customers
Interior Exterior Facilities
The Customer
Technical Core
Equipment
Service People
Backstage
Front Stage
Other Customers
(invisible)
(visible)
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Service Marketing System for aLow-Contact Service
SERVICE MARKETING SYSTEM
Service Operations System
Other Contact Points
Service Delivery System
Advertising Market Research Surveys Billing/Stat
ements Random Exposure to Facilities/Vehicles Wo
rd of Mouth
Mail
The
Self Service Equipment
Technical Core
Customer
Phone, Fax, Web- site, etc.
Front Stage
Backstage
(visible)
(invisible)
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Post-Encounter Stage
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Post-Encounter Stage
Prepurchase Stage

• Script perspective roles
• Evaluation of service performance (Expectancy
  disconformation model)
• Percieved control perspective

Consumption Stage
Post-Encounter Stage
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Theater as a Metaphor for Service Delivery
All the worlds a stage and all the men and
women merely players. They have their exits and
their entrances and each man in his time plays
many parts William
Shakespeare As You Like It
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Theatrical Metaphor An Integrative Perspective

• Service dramas unfold on a stagesettings may
  change as performance unfolds
• Many service dramas are tightly scripted, others
  improvised
• Front-stage personnel are like members of a cast
• Like actors, employees have roles, may wear
  special costumes, speak required lines, behave in
  specific ways
• Support comes from a backstage production team
• Customers are the audiencedepending on type of
  performance, may be passive or active participants

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Implications of Customer Participation in Service
Delivery

• Greater need for information/training to help
  customers to perform well, get desired results
• Customers should be given a realistic service
  preview in advance of service delivery, so they
  have a clear picture of their expected role

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Customer Satisfaction Is Central to the Marketing
Concept

• Satisfaction defined as attitude-like judgment
  following a service purchase or series of service
  interactions
• Customers have expectations prior to consumption,
  observe service performance, compare it to
  expectations
• Satisfaction judgments are based on this
  comparison
• Positive disconfirmation if better than expected
• Confirmation if same as expected
• Negative disconfirmation if worse than expected
• Satisfaction reflects perceived service quality,
  price/quality tradeoffs, personal and situational
  factors
• Research shows links between customer
  satisfaction and a firms financial performance

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Exploting the service myth of travel discussion

• How do you choose a vacation?
• What do you think about online travel agents?
• Have you ever used them? What was your experience
  if you did?
• What risks could be applied to this sector?
• What could be a solution to solve the problem of
  missing human touch?
• What do you think it means
• customer want more service
• in this sector?

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Lets discuss a bit of ethics!

• Should mary buy her own bonus?- case

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Lets discuss a bit of ethics!

• Sears auto centers- case

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